The Motley Fool

Can the easyJet share price reach 2,000p in 2018?

Since the start of the year, the easyJet (LSE: EZJ) share price has risen from 1,500p to 1,750p. That’s a gain of 17% in just over five months. This suggests that investor sentiment is improving, and that the company is delivering on its growth strategy.

However, could further gains be ahead for the company after such a strong period? Or is another growth stock worth buying ahead of it?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Changing outlook

The performance of easyJet from a business perspective has been rather mixed in recent years. The company posted a fall of 23% in its earnings last year, with this following a decline of 22% in the prior year. This means that in just two years it has recorded a fall in net profit of around 40%, with challenging operating conditions being the key reason.

Terror attacks in Europe and an increasingly competitive industry outlook meant that the company was struggling to generate improving sales and profitability. However, with consumers now seemingly more willing to travel and higher fuel costs causing unsustainable competition to recede, the prospects for the business seem to be improving.

Investment potential

In the current year the company is expected to report a rise in earnings of 35%, followed by further growth of 16% next year. Increasing passenger numbers are set to provide a clear catalyst for the business over the medium term, and investors appear to be factoring this in to the company’s valuation.

However, with the stock trading on a price-to-earnings growth (PEG) ratio of 0.9, it seems to offer value for money at the present time. Meanwhile, a dividend yield of 3.8% is forecast for next year, with shareholder payouts expected to be covered twice by profit. As a result, a further rise in its share price to 2,000p seems to be likely over the medium term.

Growth potential

Also offering strong growth potential at the present time is telecoms company KCOM (LSE: KCOM). It reported positive results on Tuesday for the full year, with it continuing to invest in its operations in order to drive future growth. It anticipates that full-fibre deployment will be available to 100% of its addressable market by March 2019. And with more customers opting for full-fibre over copper, it could be a growth area for the business.

KCOM is expected to deliver earnings growth of 20% next year. Its consumer division seems to be performing well, while it is making improvements to its enterprise business. Despite its strong growth outlook, the company trades on a PEG ratio of 1.1. This suggests that it offers a wide margin of safety.

Furthermore, with a 6.1% dividend yield that has the capacity to rise if profit growth can meet forecasts over the medium term, the total return potential of the stock seems to be high. As such, now could be the right time to buy it.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Peter Stephens owns shares of easyJet. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.